New report from Canadean on theWorld's second largest soft drinks market

The massive expansion in soft drinks coolercabinets throughout Mexico's hugely fragmented retail trade has been one of the mainreasons for the remarkable recovery of the world's second largest soft drinks market,according to a major new report from Canadean Ltd, leading international beverage researchanalysts.

The report which provides a detailed lookat the structure and dynamics of Mexico's carbonates and bottled water markets,breaks new ground in focusing on the key differences for soft drinks between thecountry's five main economic regions: Mexico City (Valley of Mexico), North, NorthWest, West Central, South East. The fastest growing region of Mexico's 14 billionlitre carbonates market is the North, for example, while volumes in Mexico City have yetto recover to 1994 levels, prior to the collapse of the peso and the economic crisis whichfollowed. (The total market, however, is now 15-20% up on pre-crisis levels.)

"With over one million soft drinksoutlets in the country, the route-to-market challenge is enormous." says Kelsey vanMusschenbroek, Canadean's chairman. "All the more so, when it is remembered thatlarge scale supermarkets still account for only a tiny proportion of total soft drinksvolumes".

Despite the growth in Mexico of globalchains like Wal-Mart and Carrefour, the report emphasises that the entrenched consumerculture of the daily 'tortilla round' means that small convenience stores and'mom-and-pop' shops still dominate soft drinks distribution. And it is here thatthat soft drinks coolers have come to play such an important role in driving consumption.New cooler placements now exceed 250,000, as they have become the focus of the competitivebattle between Coke and Pepsi in Mexico.

Panamco Mexico, part of Coca-Cola'spivotal Latin American anchor bottler, is now in the third year of its high profile"100 Metres Programme" which aims to offer consumers cold drinks (from a Cokebranded cooler) within 100 metres of wherever they live. This cooler placement strategyhas brought a vigorous response from Pepsi-Gemex, PepsiCo's sole anchor bottler inthe region, which has invested in almost as many of its own coolers, according to one ofthe detailed bottler profiles included in the new Canadean report.

The bottler profiles provide not only keyvolume and financial data, but also detailed information on plant utilisation, packaging,customer numbers, regional distribution centres, cooler penetration.

Indeed, the cooler strategy has alsoinvolved the away-from-home channel which embraces locations such as kiosks, schools, thework place, as well as hotels, restaurants, cafés, taco bars, cinemas; and has been sosuccessful in this channel that the away-from-home share of total carbonates consumptionhas risen steadily over the last three years, while that of the retail (at-home) sectorhas declined.

'Single serve' PETovertakes cans

The other reason for the renewed buoyancyof Mexico's soft drinks market is the acceleration of PET packaging which nowaccounts for nearly 60% of total carbonates volumes. The growth of large multi-serve PETbottles (both refillable and non-refillable) has driven down prices to the consumer sothat average soft drinks prices are now almost one third cheaper than the USA - theselarge PET bottles now account for nearly half the market.

At the same time, the growth in the numberof coolers has resulted in a dramatic increase in the share of non-refillable 'singleserve' PET bottles in the carbonates market, especially in the away-from-homechannel. While cans have done well (up 26% last year), carbonates volumes innon-refillable 50/60 cl PET bottles more than doubled and now have a slightly larger sharethan cans.

The report's regional analyses showthat while refillable glass remains the single largest package category for carbonates inthe South East, non-refillable PET bottles have become the leading package in the MexicoCity region, accounting for 42% of total carbonates volumes in 1998.

As for flavours, while colas have thelion's share of the Mexican market, new product launches continue to underpincategories like grapefruit and apple. In the South East non-cola flavours account forcomfortably over 40% of the carbonates market; by comparison, in the North West colas havein excess of a 70% market share, Canadean's research reveals.

In carbonates alone the new report tracksvolume sales of over 60 brand/flavour items, both nationally and by region.

The packaging analysis breaks outcarbonates volumes by 27 package types/sizes, by flavour category, both nationally and byregion.

Mexico: Water/Carbonates
Consumption Index : 1992 = 100
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Note: The new report on soft drinks inMexico is the first of a new series on major Latin American markets from Canadean Limited. For furtherinformation please contact Robert Kay-Shuttleworth or Claire Cogan on tel : 00 44 (0) 1256394224 or 12 Faraday Court, Rankine Road, Daneshill, Basingstoke, Hants, RG24 8PF, UK

Spanish Publications can also contactJavier Artiach on tel : 00 34 91 859 4886 or Canadean Limited (Sucursal en Espana),Edificio Plaza, Camiceria 31B, 28250 Torroldones, Madrid, Spain.